Budget fight could cost PSU $30 million _ or more

STATE COLLEGE, Pa. (AP) — Penn State could see funding cuts from the U.S. government sequestration upward of $30 million, but it is too early to say exactly what lies ahead, university officials said.

The $85 billion in across-the-board cuts started Friday, and their broader effects are expected to be layoffs of federal workers, delays in air traffic, reduced food inspections and the loss of Head Start programs for preschool-age children.

At Penn State — where faculty are awarded grants from organizations funded by the federal government — researchers and administrators face uncertainty in preparing for what was thought be something that never would come to fruition.

"This was supposed to be so onerous in prospect that it would be unthinkable to allow to happen," said Hank Foley, the university's vice president for research. "Well it is here — it is onerous — but it seems as though it is going to happen now."

Foley said conservative estimates have the university losing $30 million to $40 million in funding from federal grants. Or, it could be more.

Foley said that number is based on an 8 percent slash to the university's $400 million to $500 million in federal monetary support.

That could mean layoffs or a loss of research opportunities for students and assistantships for graduate students.

Research centers may have to be downsized.

In the worst-case scenario, workers at the Applied Research Laboratory — which has grants through the Department of Defense — agricultural research and engineering could see layoffs, Foley said.

But the dollar figures, the implementation and the result all are one big question mark.

"We don't know the period over which the sequester would ultimately take place," Foley said. "It is unclear how it would apply to new versus existing grants and contracts. If it is across the board, how would we be told to implement that at the level of an individual contract or grant?"

For example, Foley said, it is not clear whether each line in the grants' or contracts' budgets would see an 8 percent reduction or if the total has to be 8 percent.

"Whatever happens, we will bear down and get through it," Foley said.

The College of Engineering is one academic unit that stands to be affected, as its faculty members receive funding from federal sources.

In August, a team of researchers in the college got $2 million from the National Science Foundation to design structures that fold and unfold and can be applied for use in surgery, space structures, aircraft and robots. In October, a researcher in the college got a $600,000 grant from the National Science Foundation, and that money will create 40 scholarships and 10 fellowships aimed at recruiting minority students into engineering fields.

But spokesman Curtis Chan said the engineering deans do not know what the future holds.

"The various government funding agencies have told us that if sequestration comes to pass, they would do their best to minimize the damage to institutions like Penn State," Chan said. "We do not have an exact dollar figure on how much might be lost because we are not sure how cuts might be implemented."

Chan said officials in engineering do not know how the agencies plan to minimize the impact. Government grants and awards come with their own rules, so it is difficult to say, Chan said.

In the College of Agricultural Sciences, which sees nearly $100 million a year from the U.S. Department of Agriculture, the National Institutes of Health and the National Science Foundation, officials are in the same boat.

The college's associate dean for research, Gary Thompson, said it's impossible to know how the cuts will be handed down because each agency is planning to handle the sequester differently. As a result, college administrators are working up various scenarios.

"We intend to do the best job we can of maintaining ongoing research projects and competing vigorously for available new grant funding as we navigate these uncertain waters," Thompson said. "At stake is the work we do to feed a growing world population, to enhance food safety and human and animal health; to protect our environment and natural resources; to develop renewable, bio-based energy sources; and to advance innovation that can create jobs and grow our economy."

Thompson emailed faculty members last week with a memo from the National Science Foundation about the sequester.

In the memo, the NSF's director promised to maintain existing grants in spite of a 5 percent reduction in federal funding. The organization will reduce the number of new research grants by 1,000.

A spokeswoman for the College of Education said officials were not sure of the impacts of the sequester.

Besides the cuts to research grants and funding, the sequestration will hurt federal student aid.

Penn State spokeswoman Lisa Powers said estimates show Penn State could lose more than $231,000 in federal work-study funding and another $81,000 in the federal supplemental grant program.

Students will see the loan origination fee go up by 1 percent, so students will net less in their loans, Powers said.

The aid cuts go into effect July 1 if the sequestration is not reversed.